Tesla Goes Back To The Original Plan On Model Y Platform

Tesla CEO Elon Musk surprised many earlier this year when he announced that the upcoming Model Y SUV crossover would be based on a “completely different” architecture. It was a departure from his statement in August 2016 that the Model Y platform would be the same as the mass-market Model 3. During Tesla’s second quarter earnings call on Wednesday, Musk told investors that Tesla was going back to the original plan on Model Y platform.

Image Source: Tesla Motors (screenshot)

Model Y platform to be similar to Model 3

It means the upcoming SUV will be based on a similar platform as the recently launched Model 3. Developing an entirely new platform would have required a lot of time and resources, both of which are crucial for Tesla right now. Basing the Model Y on Model 3 platform would help Tesla bring the new vehicle to the market sooner while minimizing the cost of development. Musk told investors that it was his executive team that convinced him to reel back “from the cliffs of insanity.”

The Model Y platform will use a “substantial carry over from Model 3.” As a result, the upcoming crossover will have relatively lower production and technical risks. The Tesla CEO pointed out that SUV is the fastest growing segment of the auto industry. The EV maker can capitalize on the trend by releasing a more affordable all-electric SUV. Tesla already has an SUV in the form of Model X, but most people can’t afford it.

Tesla based the Model X on the same platform as the Model S sedan. Automakers traditionally use a single architecture to assemble different vehicles. It helps them simplify the entire manufacturing process, allowing for cost reduction and more efficiency. Many components designed for the Model 3 could be used in the Model Y. Tesla won’t have to reinvent the wheel every other year.

Model Y could be a couple of years away

Musk’s latest comments indicate that the upcoming Model Y would have similar dimensions and battery configuration as the Model 3. The Model Y is said to have Model X-like falcon-wing doors. According to Autocar, Model Y will be a fully autonomous vehicle consisting of 12 ultrasonic sensors, eight cameras, a forward-facing radar system, and a supercomputer capable of processing data 40 times faster than previously.

Musk previously said that the Model Y would enter production in late 2019 or 2020. Now that he has confirmed that the vehicle would borrow the architecture from Model 3, we should expect it to arrive well before “late 2019 or 2020.” Elon Musk didn’t update the timeline, though. The Model Y is expected to be priced in the same range as Model 3, meaning it would cater to the masses.

Talking about the new platform (now scrapped) for Model Y, Musk said earlier this year that it would ditch the 12-volt battery architecture used in other vehicles. It would have significantly reduced the wiring required. Less wiring would have led to greater automation in the manufacturing process. Reducing the wiring is still part of the plan, he told investors.

Tesla to announce new factories by the end of this year

Musk added that Tesla would announce three new factory locations later this year. At least one of them is expected to be for battery production. Another will likely be for the Model Y. The Tesla CEO has previously told investors that the Fremont facility was “bursting at the seams.” It would need a new production plant for the Model Y. His statement has triggered a bidding war among the state governments.

Musk didn’t reveal when the Model Y factory would come up or how much it would cost. But the state governments hope that the investment will be huge. Tesla never does anything on a small scale. Many states are willing to offer tax incentives and other benefits to host the new plant. According to CNBC, states such as Texas, California, New Mexico, Arizona, and Nevada are in the race to host the Model Y facility. Tesla’s mega factories create thousands of direct and indirect jobs. Experts estimate that two new jobs are created in retailers and local supplies for every job created at the manufacturing plant. The Fremont facility currently has more than 10,000 employees.

Model Y to be a major success

Right now, Tesla is focused on scaling up production to meet the humongous demand for the Model 3, for which it has received nearly 500,000 pre-orders. However, the upcoming Model Y will be an important milestone as Tesla moves closer to achieving its goal of selling one million electric vehicles per year by 2020. In June, Elon Musk teased the Model Y to drum up consumer excitement.

Morgan Stanley analyst Adam Jonas predicts the Model Y would be an instant blockbuster upon launch. Jonas told investors that the rapidly growing small SUV segment would become the largest automobile segment in the world, even as the sedan sales continue to shrink. It represents huge opportunities for the California-based EV maker.

Author: Vikas ShuklaAlthough he has a background in finance and holds an MBA, Vikas Shukla is a technology reporter. He has a strong interest in gadgets, gizmos, and science. He writes regularly on these topics. - He can be contacted by email at vshukla@valuewalk.com